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Abstract

Convergence in the communication industry is a reality – networks are being integrated, digital devices are being unified, and organizations seeking to take advantage of the breadth of opportunities are moving into neighboring industries. These ground-shifting changes have precipitated the emergence of what has come to be known as the Next Generation Network (NGN). Bridging the fixed and mobile divide, that enables the “always connected lifestyle”, where all electronic equipment can be connected to each other in a seamless manner, and users access a wide range of services free of any time, location, and device constraints, stands out as the most notable manifestation of an NGN proposition. This is also known as the Fixed Mobile Convergence (FMC). Given the general confusion and uncertainty that characterizes the rapidly integrated communications industry, this paper seeks to assess whether an integrated bundled network can itself become the gateway for the efficient delivery of multimedia applications and services. Applying the Resource Based View (RBV) theory, on the recent developments in the FMC space, this paper concurs with industry-wide skepticism and provides guidelines for the fulfillment of the NGN promise.

Historical Context

According to what has come to be known as the Telecommunications Old Paradigm, the telecommunications industry rested on three structuring principles: first, protected franchise. Domestically incumbent telecommunications operators enjoyed steady revenue flows stemming from the exploitation of their own (mainly monopoly controlled) networks (see Table 1).

Table 1.

International competitive regimes (selective) (Owen, 1991:53)

Country

Local

National

International

USA

Limited

Yes

Yes

Japan

Yes

Yes

Yes

UK

Yes

Yes

Yes

Germany

No

No

No

France

No

No

No

Other EU

No

No

No

The second structuring principle was quarantined Operators. Public Telecommunications Operators (PTOs) were restricted from the conduct of any affairs outside their pre-determined sphere of control and as such, were further barred from exporting their experience and influence into adjacent and more competitive markets. The third structuring principle was what the industry referred to as the “cradle to grave” regulation. Based on a bilateral framework (see Figure 1), prices, terms, and conditions of the PTOs service had to be sold to the regulators before they could be sold to the customers.

Figure 1.

Bilateral framework

Technologically, under the old paradigm, PTOs by and large operated within an industry that consisted of three layers (see Figure 2).

Figure 2.

Layers of the old paradigm

In the first layer of the old paradigm, switches, transmission systems, and customer terminals were produced and were combined to form the telecom networks.

Key Terms in this Chapter

Strategy: It is a planned course of action undertaken to achieve the goals and objectives of an organization. The term was originally used in the context of warfare to describe the overall planning of a campaign as opposed to tactics, which enable the achievement of specific short-term objectives.

Unlicensed Mobile Access (UMA): While CTP is limited to the Bluetooth air interface technology, UMA is an ‘air interface agnostic’ specification, which can be used in conjunction with Bluetooth, Wi-Fi, or even as yet undefined access technologies. The specification has been developed by a group of manufacturers, with limited input from some operators.

Next Generation Network (NGN): It is a packet-based network able to provide services including Telecommunication Services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It offers unrestricted access by users to different service providers. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users.

Resource-Based View (RBV): It argues that firms possess resources, a subset of which enable them to achieve competitive advantage, and a subset of those that lead to superior long-term performance. Resources that are valuable and rare can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution. In general, empirical studies using the theory have strongly supported the resource-based view.

Cordless Telephony Profile (CTP): It is a profile defined within the Bluetooth specification, by the Bluetooth Special Interest Group. CTP allows a Bluetooth-enabled cell phone to be used as a cordless telephone when it is within range of a Bluetooth CTP access point. CTP is thus a way of adding limited mobility – cordlessness – to the fixed network. It is currently deployed to a limited number of manufacturers and operators as an interim solution, primarily due to its ability to be attached to existing networks.

Competitive advantage: It is the distinct way a business or firm is positioned in the market in order to obtain an advantage over competitors, which means an ability to maintain sustained levels of profitability above the industry average.

Fixed-Mobile Convergence (FMC): It is the term used to describe a wide range of mobile services that converge elements of fixed communications infrastructure to complement the core mobile service.